5. An investor has the opportunity to purchase an European call for $7 that has expiry 8 months and strike 80. The underlying is currently selling for $75 and the variance of its annual returns is 16%. Assuming an annual risk-free interest rate of 0.05, does the option represent a good investment? [Hint: Use BSM to price the call and compare that price to the one being offered to the investor.] 5. An investor has the opportunity to purchase an European call for $7 that has expiry 8 months and strike 80. The underlying is currently selling for $75 and the variance of its annual returns is 16%. Assuming an annual risk-free interest rate of 0.05, does the option represent a good investment? [Hint: Use BSM to price the call and compare that price to the one being offered to the investor.]